Guest post: the foreclosure vote
This is a guest post by Tom Adams, who spent over 20 years in the securitization business and now works as an attorney and consultant and expert witness on MBS, CDO and securitization related issues.
I don’t expect anyone to really come up with the perfect explanation for why Clinton lost and Trump won the presidential election. But I do spend some time looking at these maps:
The first map is from RealtyTrac, and indicates the states with the largest foreclosure inventory in 2012. The second is a map of the key battleground states. In 2008 and 2012, Obama won these states. In 2016 Clinton lost them. There’s a lot of similarities between those two maps.
Even in the best economic environment, residential mortgage foreclosure is a long, messy process. The massive wave of foreclosures that hit these regions after the financial crisis had enormous consequences economically. They also had a tremendous, painful impact on the families and neighborhoods of the people affected, directly and indirectly by the foreclosures.
A rise in the number of suicides have been tide to the wave of foreclosures. Large swaths of neighborhoods were plagued by falling property values, blighted abandoned homes and a sense of uncertainty and, perhaps, doom. I often think about the effect the foreclosure crisis had on the children of affected families and the impact of children watching families, neighbors and classmates going through the painful process.
I was involved, to a small degree, with homeowners, activists and lawmakers that tried to deal with the issues and problems in the foreclosure crisis, some of which is documented in David Dayen’s excellent new book, “Chain of Title“. As Dayen documents, the government response to the issues was ultimately terribly unsatisfying and at best, had the effect of sweeping the issue under the carpet.
The consequences of the government’s response played out in this presidential election.
Clinton was aware of the problems caused by the wave of foreclosures: last fall the NY Times reported that the campaign was frustrated that the crisis had displaced so many homeowners that their database of voters was disrupted. Perhaps this is why the campaign’s get out the vote efforts in Michigan, Wisconsin, Minnesota and other states were much less effective than the campaign had hoped for. Some reports were that up to [25%] of the voters the campaign contacted were actually Republicans or potential Trump voters. In fairness, Clinton was probably concerned about the economic plight of affected homeowners and communities than she was about the technological issues it caused, but that was hardly the dominant campaign message.
How much of an impact would a compassionate outreach have had on these neighborhoods? It’s also worth remembering that the people hit by the foreclosure crisis were generally middle class – prior to the crisis they owned homes, held jobs, were members of the community. Where were they by the time the 2016 election came around?
Certainly, it’s a complicated issue and made more complicated by the fact that the Obama Administration didn’t cover themselves in accolades during the mess. But what if she had said something like this while campaigning in the battleground states:
“While I appreciate the efforts of the Obama administration to address the foreclosure crisis, the Home Affordable Modification Program simply has not provided the relief needed by many families. That is why I strongly support the creation of an Office of the Homeowner Advocate to help struggling families who have been wrongly denied assistance, or who have had difficulties navigating the extremely stressful system of avoiding foreclosure. The Office of the Homeowner Advocate will not only give Vermonters a strong voice in the process, but it will identify ways to make the HAMP program work better,”
That, unfortunately is a statement from Bernie Sanders, in 2010, rather from Clinton (Sanders continued to make it a focus of his primary efforts in 2016 as well).
Or perhaps Clinton could have spoken out in support of the frustrated community groups that sought to participate in the HUD auctions of distressed loans, only to lose out time and again to hedge funds, many of which were run by bankers who were directly involved in the financial crisis.
Maybe she was reluctant to get too involved in the issue because she tried to talk about it back in the 2008 primary and ended up being tagged as a too close to Wall Street. On several occasions in foreclosure states like Nevada, she seemed to cede the issue of the financial crisis to Sanders and focused her efforts on minority outreach instead. But in states like Florida, where many homeowners remained underwater on the value of the homes and mortgages still in 2016, the issue appeared to still be on the minds of voters on the eve of the election.
Of course, it’s easy to second guess the campaign now. I, and many others, spend hours over several years trying to get the Obama Administration or state governments to improve their response to the foreclosure crisis. By 2016, many of the people I worked with back in 2011 to 2013 on housing issues were exhausted and frustrated. I can only imagine how the people living with the foreclosure crisis must have felt.
Still, a few thousand votes in three key states would have been enough to change the outcome of the election. And when you compare these maps, it’s hard not to see the lost opportunities.